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Many South Africans are not paid a living wage that is in line with the cost of living according to research.
This shows that even employed South Africans can live in poverty because they are underpaid. Workers say they need between R12 000 and R15 000 to afford the cost of living.
In a world of growing calls for global social reform, companies that want to preserve their market share will have to pay their employees at least a living wage, professor Ines Meyer of the Living Wage South Africa Network, says.
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Her groundbreaking research paves the way for remuneration policies favouring human needs over market rates.
“Unfortunately, many companies still resist due to legacy thinking that goes against what modern consumers expect from their employers.”
Meyer defines a living wage as sufficient income for individuals and their families to afford the basic necessities of life, have something over for savings and be prepared for emergencies.
However, this is not the same as the minimum wage legislated in the National Minimum Wage Act which compels companies to pay workers a rate not lower than the prescribed amount.
“The Act focuses on a minimum amount which is a compromise between labour, business and government representatives, but the concept of a living wage looks at what a human being needs to subsist with a measure of dignity, according to Section 10 of the Constitution,” Meyer says.
Why do most companies not pay their employees a living wage although not doing so could cost them dearly? Meyer says in her experience, South African companies have three main arguments against paying a living wage.
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“The first argument is that they simply cannot afford it. Secondly, the prohibitive cost would mean letting go of employees or hiring fewer workers, thereby impeding job creation and increasing unemployment. Thirdly, the difference between the income of the lowest and next highest paid worker would be unfair on higher skilled employees.”
However, Meyer says, her research and that of bodies like the World Economic Forum (WEF) suggest this knee-jerk reaction is the result of flawed thinking that is not backed by data.
For example, the enforcement of a minimum wage in South Africa did not lead to corporate financial distress, higher unemployment or employee dissatisfaction.
“A better approach than to ask can we afford it would be how to make it happen as paying less means we ensure we keep employees living in poverty,” she said.
Meyer points out that determining an appropriate living wage is problematic locally and globally due to a lack of data and inconsistency in available data.
How should employers calculate to determine if they offer a reasonable living wage or not?
“Even if they could, who are we as middle-class earners in our ivory towers to decide what the lowest-paid workers need to live a decent life?” Meyer says with this mindset, she puts the question of what is enough not to employers but workers themselves.
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The result is a growing body of research that pinpoints the optimal living wage organisations should adopt, which Meyers says is between R12 000 and R15 000.
“While companies may see such figures as an unwanted loss to their business, the WEF has identified many overriding benefits, such as retaining customers who favour ethical companies that share their value of an equitable world.
“In addition to goodwill, lifting workers out of poverty has been shown to grow consumer markets. Companies also experience less absenteeism, greater employee engagement and increased productivity.”
Meyer warns that worker poverty can adversely affect the entire organisation, including profits and therefore early adopters of a living wage initiative stand to benefit sooner and win a greater share of the market.
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